When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. OurPrivacy Noticeexplains more about how we use your data, and your rights. You can unsubscribe at any time.

A revolution in earnings with pensioner incomes rising above those of working families has been discovered by new research.

According to the Resolution Foundation, many pensioners still live in poverty but a new wave of older people has transformed how wealth is distributed across the generations.

Today’s pensioners are more likely to carry on working, own a home and enjoy “generous” private pension pots, Wales Online reports.

The think tank found that once housing costs are accounted for, “typical pensioner households are now £20 a week better off than typical working age households”.

Back in 2001, typical “pensioner incomes were £70 a week lower than working age incomes”.

The foundation warns that “age-based stereotypes of the 20th century are increasingly out of kilter with reality” and notes that recent UK Government policy has “focused spending cuts almost exclusively on working-age households”.

Here are four reasons why many pensioners are doing well:

1. Occupational pensions

These “account for over a third of gross pensioner income growth since 2001”. A typical pensioner now has an occupation pension of more than £5,000 a year.

2. Employment

The share of pensioner households in which at least one person is in work has shot up from one in eight in 2001 to nearly one in five. This accounts for a quarter of pensioner income growth since 2000.

Read More

Related Articles

Trouble on the horizon

It also warns of major problems facing younger people that could stop them being well-off in old age. These include lower rates of home ownership and “no generational income growth”.

Younger people will also “be less likely to have access to defined benefit pension schemes”.

Tackling these challenges, the foundation argues, “will hold the key to ensuring that today’s workers enjoy the same remarkable generation-on-generation improvements in living standards that recent waves of pensioners have achieved”.

The 'most unequal' generation to date

It notes that so-called Generation X – often seen as those born between 1966 and 1980 – “has the dubious honour of being the most unequal to date”.

This is because of “the arrival of its members into adulthood from the late-1980s onwards, the precise point at which overall income inequality in the economy was reaching new heights”.

The foundation warns that “the apparent stalling of living standards progress for millennials remains a major challenge to our shared sense of what national progress in Britain looks like”.

Video Loading

Video Unavailable

Click to playTap to play

The video will start in8Cancel

Play now

A new cohort of pensioners is driving income growth

Adam Corlett, a Resolution Foundation economic analyst, said: “One of the most intriguing aspects of the recent living standards story across Britain has been typical pensioner household incomes overtaking working age households for the first time.

“This has led some to assume that all pensioners are enjoying some kind of boom amid the painful squeeze for everyone else. The reality is quite different – the incomes of individual pensioners grow relatively slowly, particularly once they’ve stopped working.

“Instead, the main driver of pensioner income growth has been the arrival of successive new waves of pensioners, who are more likely to work, own their home and have generous private pension wealth than any previous generation. Of course, not all pensioners can draw on these income sources, which is why the state pension will always be the main income for many pensioners.

“We can’t assume either that young people today will be able to drawn upon the kind of wealth that recent pensioners have accumulated, given the recent fall in home ownership and decline in generous defined benefit schemes. The big challenge we face as a society is to ensure that the record incomes that a new generation of pensioners are enjoying are not a one-off gift, and can endure for future generations too.”

Could a property levy pay for social care?

The study is published as baroness and broadcaster Joan Bakewell has suggested a property levy could be used to pay for elderly social care.

She told BBC’s Westminster Hour: “I was very impressed by Gordon Brown’s idea of the tax at the end of life.. I think it would be good if the way that we pay inheritance tax was used to look after the old.

“If we could mobilise those sums of money to be invested in care that would look after you, rather than simply handed on, or could be put into some fund that would help the old – there’s work to be done there that could be fruitful.”